The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 24th March 2015

Todd Erickson
Contributor: Todd Erickson
Posted: 03/23/2015

The Oil & Gas Weekly is compiled by Todd Erickson. Todd is a veteran executive manager in the North American E&P market.

He has management experience in high-growth oil & gas service organizations performing a leadership role in operations, strategy, and corporate development with a track record of identifying opportunities and best-practices, creating execution plans, then developing effective teams and leaders to execute them.

Learn more about Todd here

Rig Counts - select states with key plays

Select states

This Week

Change from last week

3 months ago

One year ago

Alaska

15

+4

11

11

Arkansas

9

-2

12

12

California land

13

+1

43

41

Colorado

39

+2

68

61

Kansas

12

-2

30

29

Mississippi

5

0

14

11

N. Louisiana

28

+1

28

29

New Mexico

53

-5

103

89

North Dakota

98

-3

172

178

Ohio

28

-3

45

36

Oklahoma

136

+2

205

187

Pennsylvania

50

+3

55

56

Texas

565

-36

868

858

Utah

8

0

23

28

West Virginia

21

+3

31

23

Wyoming

29

0

58

53

Total US

1069

-56

1875

1803

Total Canada land

140

-76

389

389

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

45.98

53.46

100.05

Brent

54.98

57.86

106.59

Natural Gas-USD/mmbtu

NYMEX Henry Hub

2.70

3.07

4.42

General News

Analysts expect more spending cuts for US shale oil producers

Most producers have already announced cuts in capital spending for 2015, but the continued price slide has many considering additional cuts. "If I were an oil company today, I would talk about one thing: how far can you cut costs," said Fadel Gheit, analyst with Oppenheimer. "They cannot control anything else." Producers report Q1 results in May, at which time Gheit expects more capex cuts. Moody's estimates that about a fifth of North American producers will cut budgets by more than 60% for 2015, and more than half will cut by at least 40%. Article here

US refiners expanding their ability to utilize light, sweet crude

The recent boom in oil production from shale has had a dramatic impact on supplies of light, sweet crude. Most US refiners are configured to process heavier crude oil, imported from places like Venezuela. The major shale plays produce light, sweet crude, and analysts speculated that refiners struggled to blend the large amounts available domestically. A recent study by the American Fuel & Petrochemical Manufacturers indicates that refiners responded by investing into capacity to utilize the domestically-available light, sweet crude. "With the results of today's survey, we know without a doubt that our refiners are ready and able to process the increasing US supply of light, sweet crude," AFPM Pres. Charles T. Drevna said. The survey stated that "[i]nadequate delivery infrastructure has delayed US refinery access to the new production, but significant changes and expansion in this infrastructure have and will continue to occur." Good news for US shale producers, as the respondents to the survey indicated they expected to handle up to 1.5 million barrels of light, sweet crude in 2016 over what they could in 2014. Article here

Quicksilver Resources files for bankruptcy

The company listed assets of $1.21 billion and liabilities of $1.35 billion in its bankruptcy petition. The company has US operations in the Barnett Shale and west Texas. The company's Canadian operations were not included in the bankruptcy filing. Article here

Unconventional Oil & Gas News

EIA - oil production falls in Bakken, Eagle Ford, while Haynesville gas production up

According to the Energy Information Administration (EIA) drilling productivity report, oil production fell last month in both the Bakken and Eagle Ford regions, and the EIA expects this trend to continue into April. The Permian region saw an increase in oil production, and is expected to continue increasing through April. The Haynesville Shale, a predominantly dry-gas play, saw a dramatic increase in natural gas production, which the EIA expects to continue through April. Article here

Environment and Safety News

Obama administration announces tighter rules for fracking on public lands

The rules only apply to operations on public lands, typically BLM and tribal owned lands, which make up less than one fifth of current drilling activity. The rules focus on reducing the threat to groundwater pollution, and include transparency rules disclosing chemical additives used in hydraulic fracturing operations. Both industry and environmental groups were dismayed by the rules. Two industry groups immediately filed suit to block the rules' implementation, while environmentalists claimed that fracking has no place on taxpayer owned lands. The White House hopes that the rules could lead to broader application at the state level. "That is very important from a transparency perspective but it also is important for having a template that this industry can work from, given the degree of localized concern and public concern about this," said White House deputy chief of staff Brian Deese. Article here

Mergers and Acquisitions News

Howard Energy acquires Marcellus gathering assets from Southwestern

The $500 million transaction includes 100 miles of gas gathering pipeline with a capacity of 600MMcfd. In addition to these acquired assets, Howard expects to build a system for Southwestern that will add an additional 380 MMcfd of gas gathering. Southwestern is using the proceeds to pay down debt from its acquisition of 413,000 acres from Chesapeake in the area. Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 03/23/2015

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